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ELECTION2016

HowDonaldTrumpBankruptedHis
AtlanticCityCasinos,butStillEarned
Millions
ByRUSSBUETTNERandCHARLESV.BAGLI JUNE11,2016
ATLANTICCITYTheTrumpPlazaCasinoandHotelisnowclosed,itswindows
cloudedoverbyseasalt.OnlyafaintoutlineofthegoldlettersspellingoutTRU
MPremainsvisibleontheexteriorofwhatwasoncethiscityspremiercasino.

Notfaraway,thelongfailingTrumpMarinaHotelCasinowassoldatamajor
lossfiveyearsagoandisnowknownastheGoldenNugget.

Atthenearlydesertedeasternendoftheboardwalk,theTrumpTajMahal,now
undernewownership,isallthatremainsofthecasinoempireDonaldJ.Trump
assembledheremorethanaquartercenturyago.Yearsofneglectshow:Thecarpets
arefrayedanddustcoatedchandeliersdangleabovethefewcustomerstheretoplay
thepennyslotmachines.

Onthepresidentialcampaigntrail,Mr.Trump,thepresumptiveRepublican
nominee,oftenboastsofhissuccessinAtlanticCity,ofhowheoutwittedtheWall
Streetfirmsthatfinancedhiscasinosandrodethevalueofhisnametoriches.A
centralargumentofhiscandidacyisthathewouldbringthesamebusinessprowess
totheOvalOffice,doingforAmericawhathedidforhiscompanies.

AtlanticCityfueledalotofgrowthforme,Mr.Trumpsaidinaninterviewin
May,summinguphis25yearhistoryhere.ThemoneyItookoutoftherewas
incredible.

Hisaudaciouspersonalityandopulentpropertiesbroughtattentionand
countlessplayerstoAtlanticCityasitsoughttoovertakeLasVegasasthe
countrysgamblingcapital.Butacloseexaminationofregulatoryreviews,court
recordsandsecurityfilingsbyTheNewYorkTimesleaveslittledoubtthatMr.
Trumpscasinobusinesswasaprotractedfailure.Thoughhenowsayshiscasinos
wereovertakenbythesametidalwavethateventuallyslammedthisseasidecitys
gamblingindustry,inrealityhewasfailinginAtlanticCitylongbeforeAtlanticCity
itselfwasfailing.

Butevenashiscompaniesdidpoorly,Mr.Trumpdidwell.Heputuplittleofhis
ownmoney,shiftedpersonaldebtstothecasinosandcollectedmillionsofdollarsin
salary,bonusesandotherpayments.Theburdenofhisfailuresfelloninvestorsand
otherswhohadbetonhisbusinessacumen.

InthreeinterviewswithTheTimessincelateApril,Mr.Trumpacknowledgedin
generaltermsthathighdebtandlaggingrevenueshadplaguedhiscasinos.Hedid
notrecalldetailsaboutsomeissues,butdidnotquestionTheTimessfindings.He
repeatedlyemphasizedthatwhatreallymatteredabouthistimeinAtlanticCitywas
thathehadmadealotofmoneythere.

Mr.Trumpassembledhiscasinoempirebyborrowingmoneyatsuchhigh
interestratesaftertellingregulatorshewouldnotthatthebusinesseshad
almostnochancetosucceed.

Hiscasinocompaniesmadefourtripstobankruptcycourt,eachtime
persuadingbondholderstoacceptlessmoneyratherthanbewipedout.Butthe
companiesrepeatedlyaddedmoreexpensivedebtandreturnedtothecourtfor
protectionfromlenders.

Afternarrowlyescapingfinancialruinintheearly1990sbydelayingpayments
onhisdebts,Mr.Trumpavoidedasecondpotentialcrisisbytakinghiscasinos
publicandshiftingtherisktostockholders.

Andheneverwasabletodrawinenoughgamblerstosupportallofthe
borrowing.Duringadecadewhenothercasinosherethrived,Mr.Trumpslagged,
postinghugelossesyearafteryear.Stockandbondholderslostmorethan$1.5
billion.
Allthewhile,Mr.Trumpreceivedcopiousamountsforhimself,withthehelpof
acompliantboard.Inoneinstance,TheTimesfound,Mr.Trumppulledmorethan
$1millionfromhisfailingpubliccompany,describingthetransactioninsecurities
filingsinwaysthatmayhavebeenillegal,accordingtolegalexperts.

Mr.TrumpnowsaysthatheleftAtlanticCityattheperfecttime.Therecord,
however,showsthathestruggledtohangontohiscasinosyearsafterthecityhad
peaked,andfailedonlybecausehisinvestorsnolongerwantedhimina
managementrole.

TherearethoseherewhofondlyrememberMr.Trumpsshowmanship,the
thousandsheemployedinastrugglingcity,andthetensofmillionsofdollarsintax
revenuehiscasinosgenerated.

Hewasagreatpersonforthecompany,saidScottC.Butera,thepresidentof
Mr.Trumpscompanyatthetimeofits2004bankruptcy.Withhisoversight,his
brandandmarketing,hesreallyadept.

Manyothersweregladtoseehimgo.

Heputanumberoflocalcontractorsandsuppliersoutofbusinesswhenhe
didntpaythem,saidStevenP.Perskie,whowasNewJerseystopcasinoregulator
intheearly1990s.SowhenheleftAtlanticCity,itwasnt,Sorrytoseeyougo.It
was,Howfastcanyougetthehelloutofhere?

Itstrulygoingtobeanincredibleplace1990
DonaldTrumpdartedbeneaththe70goldtippedminaretsandninecarved
elephantsthatlinedtheroof,throughthelobbyandacrossthecasinofloor,
seeminglyoblivioustothespectatorscriesofDonald,Donald,andthegamblers
clutchingbricksof$100billsattheblackjacktables.

ItwasApril1990,andMr.Trumpwasofficiallyopeninghisthirdgamblingresortin
AtlanticCity,thebiggestprojectofhiscareer:the$1billionTrumpTajMahal.

Itstrulygoingtobeanincredibleplace,hetoldreporters.Werecallingitthe
eighthwonderoftheworld.
TheTajwascertainlyofoutsizeproportions:Its42storytowerwasNew
Jerseystallestbuilding,andthecasinowastheworldslargest.

Inaremarkablyshorttime,Mr.Trumphadbecomeacommandingfigurein
AtlanticCity,withhiscasinosaccountingfornearlyathirdofitsgamblingrevenues
andemployingmorethan8,000people.

TrumpPlazacamefirst.Intheearly1980s,Mr.Trumpgainedcontrolofa
primespotontheboardwalk.Unabletogetfinancingtobuildacasino,heforgeda
partnershipwithHarrahsEntertainment,anationalgamblingoperator.

HarrahsagreedtoprovideMr.Trump,whodidnotputanyadditionalmoney
intothedeal,with$220millioninfinancingtobuildtheproject,topayhima$24
millionconstructionmanagementfeeandtogivehimhalftheprofits.

The39storyHarrahsatTrumpPlazaopenedin1984.

Fromthestart,thepartnerswereatoddsoveritsmarketingandwhosename
shouldbeparamount.

Itwasntawelldesignedpartnership,saidPhilipG.Satre,theretired
chairmanofHarrahs.Wewereabigcompanywithaninstitutionalapproachto
runningabusiness,andhewasarealestateentrepreneurwhokindofshotfromthe
hip.

ThenMr.TrumpboughtHiltonsnearlycompletedcasinointhemarinadistrict
for$320million,callingitTrumpCastle.Hiscompanyissued$352millioninbonds
tofinishconstructionandopenthecasino,andtackedonanadditional$32million.
Thatcasinoopenedin1985andcompeteddirectlyagainsthispartnersfirstcasino,
HarrahsMarina.

Thefollowingyear,HarrahsscuttleditspartnershipwithMr.Trumpandsold
himitsstakeinTrumpPlazaformorethan$220million.

NextMr.Trumpwentafterthebiggestcasinoofall,theTajMahal,which
ResortsInternational,builderofAtlanticCitysfirstcasino,waserecting.After
buyingacontrollinginterestinResortsfromtheestateofitsfounder,Mr.Trump
battledthetalkshowhostMervGriffinforcontrolofthecompany.

Intheend,Mr.Griffingotthecompany,whileMr.Trumpwonthestill
unfinishedTajMahal.

EvenbeforetheTajopened,theNewJerseyCasinoControlCommissionwas
concernedaboutthecasinosviabilitygivenitsrapidlyescalatingcostsand
consideredrevokingitsoperatinglicense.Regulatorscloselymonitoredthefinancial
performanceoftheTrumpcasinosandthedevelopersempire.

Mr.Trumptoldthecommissionin1988thathecouldreininexpenses,because
conventionallenderswerelininguptogivehimmoneyatlowinterestrates.Hesaid
heabhorredjunkbonds,whichwerethenpopular,becausetheycarriedabiggerrisk
ofdefaultandthuscamewithhigherinterestrates.

Withinmonths,hereversedcourse,issuing$675millionworthofjunkbonds,
witha14percentinterestrate,tofinishconstructionandgettheTajopen.Inrecent
interviews,Mr.Trumphassaidthatwitheachfinancingheroutinelytookmoneyout
ofthecasinostoinvestinManhattanrealestate.TotaldebtontheTajexceeded
$820million.

Lessthantwoweeksbeforethecasinoopened,MarvinB.Roffman,acasino
analystatJanneyMontgomeryScott,aninvestmentfirmbasedinPhiladelphia,told
TheWallStreetJournalthattheTajwouldneedtoreap$1.3millionadayjustto
makeitsinterestpayments,asumnocasinohadeverachieved.

Themarketjustisntthere,Mr.RoffmantoldTheJournal.

Mr.Trumpretaliated,demandingthatJanneyMontgomeryScottfireMr.
Roffman.Itdid.

Itwasdoomedwaybeforethestart,saidW.BuckyHoward,whowas
promotedbyMr.TrumptopresidentoftheTajfivedaysafteritopened,inarecent
interview.Itoldhimitwasgoingtofail.TheTajwasunderfunded.

Almostimmediately,Mr.Trumphadtroublemakingthedebtpaymentsonthe
Tajandhisothercasinos.ItwasalsoclearthattheTajwascannibalizingtheCastle
andthePlaza,whosecombinedgamblingrevenuesdroppedby$58milliontheyear
itopened.

Aftermorethantriplingasnewcasinosopenedthroughthe1980s,gambling
revenuesinAtlanticCityflattenedin1990,risingbyjust1.35percent,asgamblers
grewmorecautiousinlightofanationalrecession.Allwerehurt,recalledMr.
Perskie,thecasinoregulator,butnonewereinthecatastrophicfinancialshapeof
Mr.Trumps.

Atthesametime,Mr.TrumpsrealestateempireinManhattan,wherethe
recessioncutpropertyvalues,wasalsofailing.

InanAugust1990report,NewJerseyregulatorsnotedthesheervolumeof
debtonMr.Trumpsholdings:$3.4billion,including$1.3billiononthecasinos
and$832.5millioninloanspersonallyguaranteedbyMr.Trump.Regulators
warnedthenthatthepossibilityofacompletefinancialcollapseoftheTrump
Organizationwasnotoutofthequestion.

TheTajMahalmisseditsNovemberdebtpayment.TheCastlewasalsolate.

ByDecember1990,whenMr.Trumpneededtomakean$18.4millioninterest
payment,hisfather,FredC.Trump,sentalawyertotheCastletobuy$3.3millionin
chips,toprovidehimwithaninfusionofcash.TheyoungerMr.Trumpmadethe
payment,buttheCasinoControlCommissionfinedtheCastle$65,000forwhathad
amountedtoanillegalloan.

Asallofhisventuresnearedcollapse,Mr.Trumpslendersinsistedthathe
submitabusinessplan,appointachieffinancialofficerfortheTrumpOrganization
andsell,amongotherthings,theTrumpShuttleairline,hisyachtandhisstakein
NewYorkCitysPlazaHotel,whichalsofiledforbankruptcyprotection.Theyalso
puthimona$450,000amonthbudgetforpersonalandhouseholdexpenses.

Justoverayearafteritopened,theTajMahalwasinbankruptcycourt,followed
in1992byboththePlazaandtheCastle.Intheplanthatwasworkedout,Mr.
Trumpcededtothelendersa50percentstakeinthebusinessesinreturnforlower
interestrates.Thelendersagreedtodefercertainprincipalandinterestpayments
andholdoffonpersonalclaimsagainstMr.Trumpforfiveyears.Buttherewaslittle
ornoreductionintheenormousdebtsthatwouldplaguehisgamblingempirefar
intothefuture.

Mr.Trumpnowsayshelooksbackontheperiodashisgoldenerainthecasino
business.

Earlyon,Itookalotofmoneyoutofthecasinoswiththefinancingsandthe
thingswedo,hesaidinarecentinterview.AtlanticCitywasaverygoodcashcow
formeforalongtime.

Otherswerehurt.

HehelpedexpandAtlanticCity,buthejustdidnotputtheequityintothe
projectsheshouldhavetokeepthemsolvent,saidH.StevenNorton,acasino
consultantandaformercasinoexecutiveatResortsInternational.Whenhewent
bankrupt,henotonlycostbondholdersmoney,buthehurtalotofsmallbusinesses
thathelpedhimconstructtheTajMahal.

BethRosserofWestChester,Pa.,isstillbitteroverwhathappenedtoherfather,
whosecompanyTriadBuildingSpecialtiesnearlycollapsedwhenMr.Trumptook
theTajintobankruptcy.Ittookthreeyearstorecoveranymoneyowedforhiswork
onthecasino,shesaid,andherfatherreceivedonly30centsonthedollar.

Trumpcrawledhiswaytothetoponthebackoflittleguys,oneofthembeing
myfather,saidMs.Rosser,whorunsTriadtoday.Hehadnoregardforthousands
ofmenandwomenwhoworkedonthoseprojects.HesayshellmakeAmericagreat
again,buthispastshowsthecompleteoppositeofthat.

Itwillbethebest1996
DonaldTrumphassaidthathisbrusheswithfinancialdisasterintheearly1990s
remindedhimofalessonhisfatherhadtaughthim:Donotleaveyourselfonthe
hookforloans.

Myfatherknew,likeIknew,youdontpersonallyguarantee,Mr.Trumpis
quotedsayinginTrumpNation:TheArtofBeingtheDonald,byTimothyL.
OBrien,aformerreporterforTheTimes.IvetoldpeopleIdidntfollowmyown
advice.

Hisagreementswithlendersandthetwocasinobankruptciesinthoseyearsstill
leftMr.Trumppersonallyresponsibleformorethan$100millionindebt,andhis
agreementshadonlydelayedthedayofreckoningtoJune30,1995.

Hedealtwiththatdangerbyfirstshiftingmuchofhispersonaldebtontohis
casinos,thenontoanewgroup:shareholders.

Step1camein1993,whenhiscompanysoldmorejunkbonds,addinganother
$100millionindebttotheTrumpPlazacasino.Morethanhalfofthenewmoney
wenttopayoffMr.Trumpsunrelatedpersonalloans.

Then,inJune1995,withtheriskofbeingforcedintobankruptcyjustweeks
away,Mr.TrumpshiftedownershipofthePlazacasinotoanew,publiclytraded
company:TrumpHotelsandCasinoResorts.Intheinitialpublicoffering,10million
sharesweresoldat$14.Atthesametime,thecompanyalsosoldanother$155
millioninjunkbonds,ata15.5percentinterestrate.

BecomingapubliccompanyburdenedMr.Trumpwiththeresponsibilityof
puttingshareholdersinterestsfirst.ButMr.Trump,thelargestshareholderand
chairmanoftheboard,couldgenerallymeetthatobligationbyobtainingapproval
fromhisboardofdirectorsanddisclosingfinancialdetailsinsecuritiesfilings.The
boardsthreeoutsidememberswerewidelyseenasbowingtohiswishes.

Aweekaftertheinitialpublicoffering,thenewcompanybeganusingsomeof
thealmost$300millionithadraisedtoclearMr.Trumpspersonaldebts.During
hisfinancialpinchtwoyearsearlier,ChemicalBankhadforcedMr.Trumptogive
uphisownershipoftheTrumpRegency,ahotelnexttotheTrumpPlaza.Heheldan
optiontobuyitbackfor$60million,whichincludeddebtonthehoteland$35.9
millionthathepersonallyowedthebankfromhispurchaseofaManhattan
property.Thenewcompanyexercisedthatoption,ineffecttransferringMr.Trumps
debttoitsownbalancesheet.

In1996,thepubliccompanyissuedmorestockandsold$1.1billioninjunk
bonds.Themoneywasusedinparttopayoff$330millioninbondsonthePlaza
thathadbeenguaranteedbyacompanyMr.Trumpcontrolled,aswellasalmost$30
millionthatMr.Trumppersonallyowedtotwobanks.Thecompanyalsoboughtthe
TrumpTajMahalandTrumpCastlesoonrenamedtheTrumpMarinashifting
moreofMr.Trumpsdebttoshareholders.

Mr.Trumpcelebratedhis50thbirthdaythatJuneattheTajMahal,withthe
BeachBoysonstage.Aflurryofnewsarticlessaidhewasbacksomeevenquoted
Mr.Roffman,theanalystwhomMr.Trumphadgottenfired,givingMr.Trump
creditforturningthingsaround.(Mr.Roffmanhadwona$750,000arbitration
awardfromJanneyMontgomeryforhisdismissalandsettledalawsuitagainstMr.
Trumpforanundisclosedsum.)

Butsomeanalystsandthestockmarketsawthe$525millionthatthe
publiccompanyhadpaidfortheCastleastoomuch.Thestockbeganalongslide,
fallingfromabout$35asharebeforethesale,to$12monthslater.Shareholders
sued,allegingthattheCastlespurchaseprice,whichincludedroughly$175million
incashtoMr.Trumpsprivateholdingcompany,hadbeenagrossandunjustified
sweetheartdealforMr.Trump.(Helatersettledthesuit.)

Anothercrucialdeadlinecamein1998.Mr.Trumppersonallyowed$13.5
milliontoDonaldson,Lufkin&Jenrette,theinvestmentbankthathadunderwritten
theinitialpublicofferingin1995underthetermsofthatloan,hewasindangerof
defaulting,becausethestockpriceofTrumpHotelsandCasinoResortshadfallenso
low.Adefaultwouldhavemadehimlosecontrolofthecompany.Instead,thecasino
companylenthimthemoneytopaybackthebankers.Ashareholdersued,accusing
theboardofdirectorsofbreachingitsfiduciaryresponsibility.

T.H.C.R.isacasinoandentertainmentcompany,thelawsuit,filedin1999,said.
Itisnotinthebusinessofloaningmoney.Thecompanydesperatelyneeded(and
needs)cashtoshoreupitsdeterioratingfinancialcondition.(Thesuitwasdropped
in2000,shortlyafterMr.Trumppaidthecompanyback.)

Indeed,thecompanypostedlossesof$66millionin1996,$42millionin1997
and$40millionin1998.Thoselosseswouldcontinue.
Still,Mr.Trumpmademoney,receiving$1millionayearforwhatwas
essentiallyaparttimejob.In1996,hewaspaida$5millionbonus.Thepublic
companylenthim$3milliontocovercostshehadincurredwhileexploringwhether
toopenacasinoinIndiana,thenforgavetheloanwhenthestockmetpricetargets.

ThecasinocompanyleasedofficespaceinTrumpTowerinManhattan,andMr.
Trumpsotherbusinesseswerepaidtoentertainitshighendcustomers.Itwas
laterallegedinalawsuitthatatleastpartofthemoneywaspaidforbigname
performers,includingCelineDion,TonyBennettandBillyJoel,whohadappeared
atMaraLago,Mr.TrumpsresortinPalmBeach,Fla.Initsresponse,Mr.Trumps
companydidnotchallengethatallegation.

Trumpcasinosreportedpayingabout$300,000ayearinpilotcoststo
transporthighrollersinMr.Trumpsjet.Thecompanyneverdisclosedinsecurities
filingsjusthowmuchthejetwasusedforcasinopurposes.

Thepubliccompanyscollapsebeganin1999.Justthreeyearsafterspending
about$60milliontobuybacktheformerTrumpRegencyHotelandpumpingin
millionsforrenovations,thecompanyclosedit.Thecompanyspentanother$26
milliontodemolishthebuilding,takinga$125millionwriteoff.

In2000,Mr.Trumpfiredthechiefexecutiveandinstalledhimselfintherole,
promisinghewouldturnthingsaround.Thesharepricewasbythenhoveringnear
$3.

Stockpriceisalwaysaconcern,Mr.TrumptoldTheAssociatedPressatthe
time.IwasfocusedverymuchonmyManhattanrealestateoverthelastnumberof
years.Now,ImgoingtobefocusedmuchmoreinAtlanticCity.

Wehaveacompanythatsreallygotgreatpotential
2005
ThoughhehasacknowledgedmistakesinpilingcripplingdebtonTrumpHotels
andCasinoResorts,DonaldTrumphassteadfastlymaintainedthathisresortswere
thebestrunandhighestperformingcasinosinAtlanticCity.
Thecasinoshavedoneverywellfromabusinessstandpoint,hetoldPlayboy
magazinein2004.Peopleagreethattheyrewellrun,theylookgoodandcustomers
lovethem.

Inreality,therevenueatMr.Trumpscasinoshadconsistentlylaggedbehind
theircompetitorsforadecadebeforelargerforcesravagedtheindustry.Beginning
in1997,hisshareoftheAtlanticCitygamblingmarketbegantoslipfromitspeakof
30percent.

RevenuesatotherAtlanticCitycasinosrose18percentfrom1997through
2002Mr.Trumpsfellby1percent.

Competitiongrewmoreintensein2003,whentheBorgataHotelCasinoand
Spaopened.The$1.1billion,40storyresortredefinedtheconceptofanAtlantic
Cityluxurycasino.RevenuesatTrumpcasinosdroppedanother6percentinalittle
morethanayear.

HadMr.TrumpsrevenuesgrownattherateofotherAtlanticCitycasinos,his
companycouldhavemadeitsinterestpaymentsandpossiblyregisteredaprofit.But
withsaggingrevenuesandhighcosts,hiscasinoshadtoolittlemoneyfor
renovationsandimprovements,whicharevitalforhotelstoattractguests.The
publiccompanyneverloggedaprofitableyear.

Theressomethingnotrightwheneverysingleoneofyourprojectsdoesnt
workout,saidMr.Roffman,thecasinoanalyst.

Inarecentinterview,Mr.Trumpattributedhisdecliningmarketshareinthose
yearstothefactthathisthreecasinoswerecompetingwithoneanother,atacit
acknowledgmentthatheoverbuilt.

Thatwasthebadnews,hesaid.ThegoodnewsisthatIsavedalotofmoney
intermsofdealingwithcosts.

TheyeartheBorgataopened,Mr.Trumpwasalreadyaskinghisbondholdersto
acceptlessmoney,inpreparationforathirdcasinobankruptcy.Yet,atthesame
time,hemanagedtopullmoremoneyoutofthecompanyforhimself,TheTimes
found.
SincetakingTrumpHotelsandCasinoResortspublic,Mr.Trumphadbeen
boundbyacontributionagreementthatrequiredhimtoengageinthegambling
businessesonlythroughhisowncompanyandbannedhimfrompersonallyowning
morethan5percentofthestockinanyothercasinocompany.Sowhenhebought10
percentofthesharesinRivieraHotelandCasino,acompanybasedinLasVegas,
Mr.Trumpwasrequiredtograntanoptiontopurchasethesharestohispublic
corporation.

However,whenMr.TrumpsoldtheRivierasharesinApril2004,thecompany,
whichwasentitledtotheproceeds,simplycanceledtheoption,withoutexplanation.

ThecompanysdescriptionofthesaledidnotdiscloseMr.Trumpsprofitor
howhehadsoldtheshares.Butinitssecuritiesfilings,RivierareportedthatMr.
Trumphadsoldthesharesinaprivatelynegotiatedsalefor$10ashare,wellabove
thegoingprice.Thatwouldhavegeneratedagainofmorethan$1million.

AskedtoreviewthetransactionbyTheTimes,JamesD.Cox,aprofessorat
DukeUniversityLawSchoolwhospecializesincorporateandsecuritieslaw,said
suchmaterialomissionsoffactinthefilingsbytheTrumpcompanycouldhave
resultedincriminalchargesifitisknowingandwillful,thoughsuchchargesare
rare.

Ithinkthebiggestthingis,itunderstateshiscompensation,Mr.Coxsaid.

Atthetime,thecompanywasalsoaskingitslendersforabreak,andheaded
towardanotherbankruptcy.

Basically,thatsoundslikeafraudulentconveyancesaidDavidSkeel,a
bankruptcylawprofessorattheUniversityofPennsylvaniaLawSchool.

Thecompanyisthrowingawaymoney,ProfessorSkeelsaid.Itsthe
equivalentofgivingbigbonusestoyourexecutivesrightbeforeyoufilefor
bankruptcy.

Butlawyersinvolvedinthebankruptcycasesaidthetransactionhadapparently
goneunnoticed.
Inarecentinterview,Mr.Trumpsaidthathedidnotrecallthetransactionor
whytheboardhadcanceleditsoption.

Monthslater,inNovember2004,thecompanyfiledforbankruptcyprotection,
thethirdsuchtripforTrumpcasinos.

Thistimebondholderstooka$500millionloss.Mr.Trump,whosteppeddown
aschiefexecutivebutremainedchairmanoftheboard,agreedtoinvest$55million
ofhisownmoneyinthecompany,perhapshisfirstcashinvestment.Hestill
received$2millionayearunderaservicesagreement,whichincludedtheuseof
hisname.

Sharessometimestradedbelowadollar,butMr.Trumpsaidtheproblemshad
beenfixed.

Forthefirsttimeever,thiswillbeadeleveragedcompany,Mr.Trumptold
TheLasVegasSunin2005.

Noteveryoneagreed.Mr.TrumpslongtimeinvestmentbankersatDonaldson,
Lufkin&JenrettehadbackedoutofadealwithMr.Trumptoinvestinthecompany
shortlybeforethebankruptcywasfiled.Suingfor$26millioninfees,thebankers
saidincourtpapersthatthecasinoswouldbebackinbankruptcycourtwithinfive
yearsbecauseMr.Trumpsrevenueprojectionsweretoorosyandthecompanywas
stillcarryingtoomuchdebt.

TheTrumpnamedoesnotconnotehighqualityamenitiesandfirstclass
serviceinthecasinoindustry,lawyersfortheinvestmentbanksaid.Rather,the
Trumpnameisassociatedwiththefailuretopayonesdebts,acompanythathas
lostmoneyeveryyear,andpropertiesinneedofsignificantdeferredmaintenance
andlaggingbehindtheircompetitors.(Thedisputewaslatersettled.)

Theywillseehowgreatitwillbecome2009
WhenDonaldTrumphasbeenpressedonhiscasinosperformanceduringhis
presidentialcampaign,hehasrepeatedlysaidheleftAtlanticCityattherighttime.

AtlanticCityisadisaster,andIdidgreatinAtlanticCity,hesaidduringa
RepublicanPartydebatelastSeptember,accordingtoatranscript.Iknewwhento
getout.Mytimingwasgreat.AndIgotalotofcreditforit.

ThatwouldsuggestMr.Trumpwillinglyleftsometimearound2006,theyear
thatrevenuespeakedinAtlanticCityandthatPennsylvaniaalloweditsfirstcasino
toopen,adevelopmentthatmarkedthestartofarapiddownwardspiralinthecity.
Thedropoffwasexacerbatedbytherecessionthatbeganin2008.

Butinearly2009,asTrumpcasinoslurchedtowardbankruptcyforthefourth
time,Mr.Trumpwasstilltryingtohangon.Atloggerheadswithboardmembers
whohadbeenselectedbybondholdersafterthe2004bankruptcy,heofferedtobuy
allorapartofthecasinocompanybearinghisname.Hewasrebuffed,andhequit
theboardsoonafter.

TestifyinginbankruptcycourtinCamden,N.J.,Mr.Trumparguedthatthe
companycouldnotusehisname,sinceshortlybeforefilingthebankruptcyithad
stoppedpayinghimthe$166,000amonthhereceivedundertheservices
agreement.Hetestifiedthathisbrandwasworth$3billion.Healsotestifiedthathe
waspersonallynegotiatingthesettlementofalawsuitinFloridathatwouldyield
morethan$100millionforthecompany.

Andcontradictingwhathehadsaidafterthepriorbankruptcy,hetestifiedthat
thecompanysdebtloadwasstilltoohigh.

Thistime,thedebtisbeingcutbyalot,andthecompanyisreallypoised,he
said.

Therewereoddmomentsonthestand.Mr.Trump,forexample,vastly
understatedhisrole,sayinghebecameverymuchlessinvolvedwiththecompany
duringyearswhenhewasactuallychairmanoftheboardandchiefexecutive,and
wasontheboardinaveryminoritypositionduringyearswhenhehadbeen
chairman.

Asinpreviouscases,otherswarnedthatMr.Trumpspromisesshouldnotbe
trusted.ThistimeitwasCarlC.Icahn,theactivistinvestorwhohadamajorstakein
thecompany.(ThetwomennowdescribethemselvesasfriendsandMr.Icahn
supportsMr.Trumpscandidacy.)

Mr.Icahnsteamarguedthattheremainingdebtwasstillunsupportable,that
theTrumpnamewasreplaceable,andthatawindfallfromtheFloridalawsuitwas
wishfulthinking.UnderMr.Trump,thecompanyhadalonghistoryofmakingrosy
revenueprojectionsandnevermeetingthem,Mr.Icahnslawyerargued.

ButajudgeapprovedtheTrumpplanandnotedthatMr.Trumpandhis
supportershadestablishedthattheTrumpbrandisworthmillionsofdollarstothe
casinos.

Thistime,bondholdersgaveupabout$1.3billioninexchangeforcontrolofthe
company.Forthefirsttime,Mr.Trumphadnoofficialroleatthecompanyhehad
founded,andheownednomorethan10percent.

Inarecentinterview,Mr.TrumpacknowledgedthatheleftAtlanticCitywhen
hedidbecausehefailedinhisefforttobuybackthecasinos.Buthesaidthetiming
workedoutwellforhim,intheend.

In2009theywereworthahellofalotmorethantheyarenow,hesaid.
Sometimesyourebetteroffluckythangood.

TrumpMarinawassoonsoldfor$38million,lessthan10percentofwhatthe
companypaidMr.Trumpforitin1996.ThePlazawasshuttered.TheFlorida
lawsuitthatMr.Trumphadvaluedatmorethan$100millionproducednothingfor
thecompany.Mr.TrumpandhisdaughterIvankasuedthecompany,sayingtheir
brandwasbeingtarnishedbytheramshackleappearanceoftheTajMahal.

Mr.Trumpcontinuedtoearnmoneyfromthecasinos.In2011,thecasinos
reportedleasingaTrumphelicopterfor$390,000andspending$236,000for
Trumplabeledmerchandise,including$197,000forTrumpIcebottledwater.

Inretrospect,DavidHanlon,aveterancasinoexecutivewhoranMervGriffins
AtlanticCityoperationsatthetimeoftheResortsbattle,said,Mr.Trumpsucceeded
inrepeatedlyconvincinginvestors,bankersandWallStreetthathisnamehadreal
value.
Theyweresoinlovewithhimthattheycamebackasecond,thirdandfourth
time,Mr.Hanlonsaid.Theylethimstripoutassets.Itwasawfultowatch.Itwas
astonishing.IhavetogiveTrumpcreditforusinghiscelebritytimeandtimeagain.

In2014,thecasinocompanyfiledforbankruptcyprotectionforthefifthtime.
Thechiefexecutivecitedthedebtlevelafterthe2009bankruptcyastheprimary
reason.

Foratime,Mr.Trumplentaglamoroussheentothefadedresortcity.Butsome
ofhisformerinvestorsnolongerseethevalue.

PeopleunderestimatedDonaldTrumpsabilitytopillagethecompany,said
SebastianPignatello,aprivateinvestorwhoatonetimeheldstockintheTrump
casinosworthmorethan$500,000.Hedrovethesecompaniesintobankruptcyby
hismismanagement,thedebtandhispillaging.

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